New Delhi: Asia Pacific will surpass North America, the largest telecom market in the world, in terms of revenues in 2008, research firm Gartner Inc., predicted on Wednesday, saying that growth in the fixed voice sector and in the most developed countries has slowed or even begun to shrink.
Gartner added that by 2012, the ratio of mobile to fixed connections will exceed 4:1.
Research found that, “North American telecom revenue forecast is to $511.6 billion in 2008, a 4.5% increase from 2007. The telecom market in Asia/Pacific is projected to reach $513.1 billion in 2008, up 8%from 2007.” However, it said that the Middle East and Africa would be the fastest-growing region with a CAGR of 8.6% between 2007 and 2012.
The worldwide telecommunications market is on pace to reach $2 trillion in 2008, a 7.6% increase from 2007 revenue of $1.8 trillion.
“We forecasts that revenue in the mobile sector will top $1 trillion by 2010,” said Will Hahn, principal research analyst at Gartner.
Gartner said in the report that traditional telecom service providers and equipment manufacturers were seeing convergent trends eroding their margins while rising Asian players and other entrants eat away at their share within the total market.
Report cites, “Growth in legacy markets is ebbing fast and the only way to maintain it will be via the scope to offer converged solutions, to provide service in nontraditional sectors and to enter and win in emerging markets whose profile is very different from more-mature regions.”
Gartner said that revenue in the telecom service segment is expected to reach $1.6 trillion in 2008 accounting for 81% of overall telecom revenue. “In 2007, total telecom service revenue was $1.49 trillion, four times higher than total telecom equipment revenue at $353 billion.
Gartner forecasts that by 2012, the service segment will have a CAGR (short for compounded annual growth rate) of 4.4%, compared with 8.7% for the equipment segment. As a result, the relative proportions of the two segments will finally begin to move downward, closer to 3:1.
“Revenue from telecom services has traditionally dominated the market, accounting for four out of every $5 earned in the sector,” said Hahn said.
Gartner forecasts that this historic proportion will now shrink, an indication that legacy revenue is no longer sufficient for carriers to justify their investments and that the growing equipment sector is being deployed to support new and converged services.